Don't Trip Yourself up While Buying a Home
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Many new homebuyers make the mistake of rushing out to buy new things for their home soon after the seller says "yes" and the loan is approved. There still remain a few major hurdles to jump before the house is really yours. Below you'll find a list of things to stay away from during this crucial time of your home purchase.
Don't overspend on big-ticket items It may be tempting to buy that new Turkish rug for the soon-to-be-yours parlor, but it's best to stay away from making major purchases like furniture, appliances, jewelry, or cars until closing. Using credit cards to buy furniture could jeopardize your loan process by distorting your numbers. It's also a bad idea to make those huge purchases using cash. Lenders are looking at your cash on hand when considering your loan.
Don't go on a career search. Your recent job history should show consistency. Finding a new career (particularly one with a better paycheck) may not change your ability to qualify for a mortgage loan. However, if you switch careers before your loan is approved, your mortgage process could fail or be stalled.
Don't switch banks or move money around in your bank accounts. While the lending institution reviews your loan application, you will probably be instructed to produce bank statements for the last two or three months for your saving and checking accounts, money market funds and other liquid finances. To detect potential fraud, most loans want detailed paperwork to determine the source of all funds. Even for innocent reasons, transferring cash or switching banks might make it difficult for the lending institution to confirm your bank history.
Don't give your FSBO (for sale by owner) seller earnest money, delivered to his door. Your good faith money does not belong to the seller: it is actually yours until the transaction is final. Although some individual sellers may not realize this, your good faith money should be used for the buyer's closing expenses. Get an attorney or other neutral party who will hold the funds or place them in a trust account until you close. If your sale falls through, the contract with the seller should document where this earnest money should go.
At The Mortgage Network, we answer questions about this process every day. Call us at (303) 993-6358.